Hollande Labor Talks Edge Toward Accord Without Hardline Unions

By Mark Deen -
Jan 11, 2013

President Francois Hollande’s bid to
revamp French labor law is heading toward an agreement that’s
set to leave out the country’s two most hardline unions.

Negotiations between business leaders and unions advanced
today as employers agreed to an increase in social charges for
some short-term job contracts. CGT and FO, two of the five labor
unions involved, said they won’t go along with the accord.

“We have made substantial progress, though there remain
three or four points to clarify,” Patrick Pierron of the CFDT
union told journalists outside the negotiating room in Paris.
“We’re not there yet but we’re moving toward an agreement.”

Socialist Hollande is seeking to stem a 19-month-long
increase in jobless claims and improve the competitiveness of an
economy that has barely grown in more than a year by giving
employers greater flexibility in a slump. The latest working
draft being discussed includes terms that would allow companies
to cut working time and pay when orders from clients dry up.

“We’ve made a significant effort,” said Patrick Bernasconi, who’s representing the Medef employers’ lobby in the
talks. “We have made advances that will make businesses more
competitive, that will create the conditions for more employment
because there will be greater flexibility in the labor market.”

After pushing through a 20 billion-euro ($27 billion)
payroll tax credit for businesses last year, the labor
negotiations are the second significant plank of Hollande’s plan
to improve French competitiveness in the wake of the euro area
sovereign debt crisis.

Labor Costs

Labor costs that are high relative to its neighbors and
rigid working rules have contributed to France’s record trade
deficit and surging unemployment, economists say.

The European Commission, the International Monetary Fund
and the Organization for Economic Cooperation and Development
have called on France to do more to bolster its competitiveness.

“It’s essential that France continue on the path of
reform,” European Union Economic Commissioner Olli Rehn said
today in Brussels. “I’m looking forward to a positive outcome
from the consultations between the social partners and I’m
looking forward to bold and determined action by the French
government.”

Still, some unions say they’re unlikely to endorse an
agreement along the lines currently being discussed, saying it
will encourage the use of short-term contracts that leave
workers without job security.

Short-Term Contracts

The rigidities of France’s full-time work contracts have
already driven employers to increasingly use short-term
contracts, leading to a two-tier labor market.

Of the 21 million job contracts signed each year, only 3
million are permanent, with the rest being short-term pacts. Of
the 18 million short-term contracts, 14 million are for less
than a month, according to Louis Gallois, former head of Airbus
SAS parent European Aeronautic Defence and Space Co., who was
asked by Hollande to write a report on French competitiveness.

“Signing this accord is out of the question,” said
Stephane Lardy of the FO union. “What we want is a tax on all
temporary contracts. No one really expects this deal to lead to
more permanent contracts.”

Agnes Le Bot of the CGT agreed. “This doesn’t respond to
the need for more secure jobs,” she said. “We don’t intend to
sign” an agreement that reverses social progress.